What Are The Vegas Odds Of Success On Today’s Major Label Record Deal?

It is a known fact that many acts get stuck in limbo once singed to a major record label, neither being released or advanced to the next level. How many of the acts that majors sign ever actually get released, or make a second album? Are the odds of commercial success better by staying Indie, or about the same, all things considered? The following answers, from the new tell-all book 100 Answers to 50 Questions on the Music Business by music business veteran Moses Avalon, are real eye-openers.

Moses Avalon

In Las Vegas, the odds to each game are readily available: roulette, 33:1; blackjack, 1.5:1 (if played optimally); craps, anywhere from 2:1 to 9:1. But what about the chances of getting signed and having a successful career recording albums? Sure, there a lot of factors, like if you’ve got talent—but what about the raw odds? The “Vegas odds”?

I did some research and was intrigued to find that there are no published stats on this. Here, perhaps for the first time, are the “Vegas odds” of record deals and going major verses staying indie. (UPDATE: While tweaking this piece which was originally published in my new book, released in March of 2011 a new article came out on Music Think Tank with more data on this subject. See the bottom of this page for the link.)

***NOTE: All math equations are noted by a number in parenthesis (#) and the equation is at the bottom of the post. I do this to maintain the narrative flow. (Also, I hate math.)

GETTING SIGNED

According to my sources at the various major labels, each year approximately 43,000 demos are sent to the 35 major labels. (Up from about 30,000 ten years ago.) I consider these 35 labels “major” as they are directly connected to the Four Major US Distributors or their affiliates. Out of those 43,000 demo submissions a total of about 30 get that rare multi-album deal of yesteryear which includes a large advance and all the perks (down from about 150 in the early 2000s). But, if you count all the demo, development, P&D, and various forms of 360 and licensing deals, it adds up to about 1,000 new deals each year. It’s not an even split. Between Universal, Warner, Sony/BMG and EMI it can get pretty lopsided, with about 500 deals parsed throughout the massive family of Universal labels, alone.

So, the Vegas Odds of even getting signed to one label if you submit your demo to all four major labels is about 1:42. Just a little bit worse than playing double-zero on the roulette wheel. But now, let’s drill down. . .

GETTING RELEASED

Getting signed is one thing. Getting released is another. And actually fulfilling your five-album commitment is yet another thing entirely.

In the past, out of these 1,000 aggregate label signings only around 250 would have been released to the public or have been promoted from “demo deal” to “album deal.” But since 2008 this number has been reduced to the current level of about 100 per year. So, the odds of being released after you beat the 1:42 odds are about 1:9. Big leap. So far, this brings the aggregate odds to go from minimum wage pizza-delivery guy to low-six-figure playa’ to about 1:429. (1)

Of the 100 albums released, only 50 will sell enough records to justify a second album. Of that 50, about 30 will make a third. Of the 30, only about 20 will make a fourth on the same label, or have their contract “up-streamed” to a parent label.

We are now in roughly the 6th year of the multi-album deal and it is usually here that is the tipping point for the artist; the point at which he can now feel secure that he will never likely have to return to his day job. (A sell-through of 70% of units shipped will earn you a next shot. If you have an out-of-the-box smash hit record at any point in this process, you leap-frog immediately into year-six, or fourth album status.)

I think most of us would agree that this benchmark is “success,” no matter how you measure it: doing music and nothing else to pay the bills. By album four (roughly six years into the major label deal) the artist can remove that Bachelor’s degree in computer science from their den and replace it with a Gold record plaque. They will buy a new house, maybe several, hire relatives to work for them and become a demanding pain-in-the-ass to the label.

When major labels say that less than 5% of the artists they sign “make a profit,” this is the basic concept they are referring to. However, this is misleading. In essence, even if most major label signings don’t result in the creation of a superstar, the dropped or “failed” acts left behind at album two or three or dropped one album after their sales peek, still generate enough ancillary interest (read “income”) to create mini-empires with myriad revenue streams. These are the “one-hit wonders” who still tour and generate mass appeal off their single hit from 20 years ago. They sell records of new releases in respectable numbers and can still fill a 3,000-seat venue. And remember — these artists are considered the “failures” by major label standards. Which ain’t a bad way to fail, if you ask me.

So, that brings the Vegas Odds of going from basement tape to having the label release your album to about 1:429, and the aggregate odds to go from garage-dope to Grammy-hope (or at least making it to your 4th Option Period) at a whopping 1:2149! (2)

THE LONGER YOU PLAY THE HARDER TO STAY

But, the odds have an interesting dynamic if you survive the major label game a few years. Now, this gets a bit complex and rather than make this piece 10,000 words with graphs, here’s the simple math:

Let’s say you’re one of the 500 signed to a label in the Universal family. In year one you’re competing with the other 499 freshmen plus the already existing 1,500 or so senior acts at have survived this game and have product in the UMVD retail pipeline. You’re actually competing with about 2000 acts for promotion/marketing money from the label.

This is hard enough, but, by your third release, it will be year four. That means you will have the 500 acts signed that year, the 1,500 senior acts, (the senior number remains constant because large distributors budget for the same amount of releases, more or less, each year) the remaining 50 from the class right after you, and the 20 remaining in your class. So, about 2,070! (500 + 1500 + 50 + 20 = 2,070)

Now remember that this expansion is happening at other labels as well. Even tough the math is convoluted, you can see where this is going. The longer you survive, the larger the field becomes (contrary to what you probably thought). Just like Vegas, the longer you play, the more challenging it is to win; as the stakes rise, so too does the quality of the competition.

So the 1:2149 odds are probably too low as a constant and will actually increase as you approach superstar status. Remember that now you are in the 1:2149 club and everyone else there wants to be the million-to-one superstar. History has taught labels that even if you sold millions of your last release, this does not mean you’ll repeat that level of sales in your current release. You have to prove yourself each time to the marketing team, with each new release. And every year there are more artists entering in that particular competition (as they survive each level in this game) and the harder it is to get attention from your sugar-daddy, the major label.

What will you do to stand out? Now that you’ve beaten some of the toughest odds on the planet, what will you do to hold on? Just about anything.

Now you know why beak-out acts seem to do stupid things just to get publicity. Or why some artist’s sound remains consistent to their formula from one album to the next. They are trying to duplicate the 1:2149 odds. They are trying to make lightning strike twice, because guess what, the inverse of those odds also resemble the odds of getting dropped. Like most competitions, you get more desperate towards the end-game as the challenges ramp up to a steep gradient. And 1:2149 is pretty steep.

STAYING INDIE

Think your chances of quitting your day job are better without a major label — or for that matter — any label? No one to compete with for marketing dollars? Guaranteed release of all five albums? Less pressure to stay on top. Could be. Let’s see.

According to SoundScan, in 2009 all labels/artists of every size in the US released a total of approximately 100,000 titles. But just a little over 2,000 titles sold more than 5,000 units. Which for an indie record label or DIY artist is often thought of as the (break-even) point that financially justifies an investment in a followup release. (Although many will make a second album whether it’s financially justified or not.)

In simple probabilities this means a 2% chance of success, or odds of 1:49. (Rounded to nearest whole number.) Which is on par with the major label odds of just getting any deal at all! Sounds great, right? But… in the DIY scenario you will not be getting the support of a marketing department, professional publicist, SEO people, producers, A&R guidance, and let us not forget– Advances. And…

To reach the same plateau of success of the artist who has beaten the 1:2149 odds on the major, you have sell in the top 2% consistently for six years in a row as well as having year after year of profitable tours and merchandise sales. All with virtually no corporate safety net.

There is no way to calculate those odds without a team of actuaries but we do have some anecdotal data from which to draw a raw math formula: Imagine going up to a roulette wheel with 50 numbers on it (remember in this scenario 1 in 50 releases sells enough to warrant a second release) and hitting the winning number 6 times in a row. The probability is 50 to the 6th power or about 15,624,999,999:1. (Yes that is 15.6 Billion!) (3)

Okay, that is preposterous. Certainly many artists have beaten those odds in the DIY world, right? So how about this: let’s say that each year that you make it into the 2% group, you’re odds are twice as good as getting into the 2% group the following year. So, instead of a probability of 50:1 in year two, you’re at 25:1. And the next year the same thing and each year your odds of success improve because of increased fan base, sponsorship, established tour rout and just basically knowing what you’re doing. So year three is 12.5:1, year four, 6.25:1, year five, 3.13:1 and the benchmark “tipping point” year six is a fantastic 1.6:1. Now we’re talking right? This sounds eminently reasonable, yes?

So what are the aggregate odds now that we’ve made the assumptions more sensible; the odds of going from emerging wannabe to indie Sotheby? Get ready…

Around 1:477,000! (4)

Hummm… Not the “million to one” shot often hyperbolized, but still, 1:2149 is starting to sound like a sure thing.

Now you know why indie “success stories” are so infrequent. With roughly 2,000,000 acts with fan pages on MySpace and Facebook we can expect, using these assumptions, a yield of about half-a-dozen breakout acts. And when you think about it, that’s about what we have seen from the indie world since the dawn of the internet age in 1998. A very small hand-full of acts that have really distinguished themselves exclusively in the indie world have gone on to… you guessed it… sign with a major.

Now remember that is piece is about raw odds. There is much that can be done to mitigate them. Like knowing more about the business, great management, persistence, and of course — talent.

But, if you’re looking at the Vegas odds for your chances of doing music and nothing else, a major label deal, sucky as it can sometimes seem to be, is still, by far, the best bet in the house and one that you must at least consider if you’re in this for the long haul.

Next time a technoista twenty-something artist tells you he is not even considering a major because he has over 3000 fans, followers, friends, whatever and an aggregator to get him on iTunes, do him a favor and show him this article. You might just be saving his life.

Mo out

WANT MORE? A very interesting angle on this exact question was responded to on Music Think Tank by a UK blogger. He uses entirely different assumptions, but oddly enough comes up with some similar answers aboutsucceeding without a record deal.

If the info presented here piques your interest, take a look at some of the other questions and answers I address in my latest book. Support this site and expand your knowledge by getting your copy today. CLICK HERE.

CALCULATIONS USED IN THIS PIECE:

Special thanks to my buds Brian B and particularly Jon Rezin for providing the math. (PS. if you want further explanation of the math ping Jon on Twitter.)

21 responses to “What Are The Vegas Odds Of Success On Today’s Major Label Record Deal?”

A very interesting analysis. I think one of your more interesting points regards the so-called “failures” of the major label system: they’re not selling enough records to justify the $1 Million investment so they’re dropped. But, many of those bands use the exposure and brand recognition that was fueled by major label money to create sustainable careers on their own or at a major indie where the investment is understandably less. Look at how many major acts are now with Concord, Rounder and similar labels. The act no longer sells in the millions but can be counted on to sell 50,000 units. That’s still good business if the investment side is controlled.

I’m not sure what the point of this exercise is. Statistics, as the saying goes, can be used much as the drunk uses a lamp post, more for support than illumination.
This same approach has been used to illustrate what the chances are a gifted high school athlete will make it to the pros. But if my child were one or more importantly a musician, our discussion wouldn’t include the Vegas line.

I guess the idea here is that if you are going to go for it, a major label deal offers better odds of success than an ‘indie’. But if hitting it big is all you’re concerned about, chances are you won’t make it anyway. If you want insurance or assurance, it’s nowhere to be found. It’s a journey not a lottery ticket.

If you’re dedicated and talented, the odds either way won’t be relevant. Are the chances higher that a major label experience, if offered, will be a disappointing one on a creative and control level, yes. But in the end, there is no algorithm for success. You’re gonna have to figure it out for yourself and it won’t be as simple as major vs. indie.

Really great post! Everyone that I’ve talked to, including my music business professors at college, have always given “hypothetical” answers when they’ve been asked what the chances of even signing with a label are as well as your chances of success. Well, screw hypothetical because Moses Avalon just broke it down!

Thanks for this. The first thing I thought when I read the UK blogger’s “Succeeding w/o a Label” last week, was there’s probably no difference either way, considering all the label’s money goes to the top pct of producing artists!

For every platinum label seller, there are hundreds on the same label making less than they would part-time at McDonalds.

As for indies, there are thousands who will never get past the local pub, but a handful who are making 5 & 6 figure incomes w/o label support.

Great article! This is the first I’ve gotten to read since recently subscribing. My band, Destruction Evolution was recently signed by EMI to a distribution and administration deal, but it’s probably the “outlier” in this case, so our numbers would probably be thrown out. We are a military-affiliated act signed to GI Jams, and because our small label only promotes military-affiliated acts, we were sold as a “package” as much about the concept as it was for us being a solid southern metal act. Again, I’m glad that I subscribed! Keep it coming! Sin, Vocals, Destruction Evolution, San Antonio, Texas

Dear Moses,
This is the BEST article you’ve written yet! and you are right! It’s the FIRST TIME anybody has laid the odds out, Vegas style! love it! This should be requied reading for any kid who wants to go into the music business.
Ran

I gotta say Mo, this is one of the best “statistical analysis” approaches I have seen, and I have listened to many an “expert” in the music biz. The point is so simple really… what are the odds? I personally wonder sometimes if one of the elements making the music biz appear so bleak is that all of those dropped and forgotten acts can now communicate immediately and freely on the http://www…and previously they were simply ignored. I think it bears mentioning too, that many a musician does find a way to “make it” in other ways, jingles, film, audio beds, lessons, etcetera, though I don’t know the odds there (maybe similar?). Finally, I don’t think the “odds” will stop an artist, because there is no “off switch” on somebody with a vision. My band never got past the first album with Warner Bros, but it was a great ride in many tangible and intangible ways. Thanks for the article / thoughts.

Thanks, Mo – this was truly an excellent article. And the timing is great for me because I now need to rewrite my marketing plan for tuneinunderground.com (don’t bother clicking it – we’re not online yet) because I have finally found a quality “Web-designer” who will do the job on a percentage. Let’s face it: $11,500 isn’t much of a budget for going on four years now…so it’s been tough. Anyway, this article gives me some great stats to work with. And many things have changed since then.

So I know you were in New York recently. I tried to get a rep to meet with you, but it didn’t work out (sorry). And I know you still come to Columbus, OH for that other thing the 3rd w/e in June. Some day I’ll get to shake your hand…

I know it’s been awhile since we talked. I’m the guy who called you a couple of years ago and paid you a consultation fee to go over [name redacted], Inc.’s initial b-plan. I’m still here… and still working on it.

What do you think of ReverbNation? Any suggestions of what to do better than them are appreciated, if you have the time. They’re still the closest thing out there to what I’ve been trying to do. I have several ideas already…

So our goal is now to have a Beta version up in October. Release is set for the first of the year (tentatively). I’ll keep you posted as we progress.

Thanks again for another great article. I really appreciate them. I know you’ll keep ’em coming!

Very interesting piece! Whether it’s a half-million to one or a
million to one it’s always been a major crapshoot and now with the
internet flooding the world with millions of “Artist” and
multi-millions of songs, it has really watered down the odds even more
in my opinion.

I used to tell people when they asked me how to “Get into the
Business”, that it goes this way. You hone your craft until it is as
good as it can be, and that is like buying a Lottery Ticket. Then
after years of sacrifice and glad-handing, moving from Peoria to LA,
NYC or Nashville you hope and pray that your number comes up.

I love Annie Liebowitz’s comment on buying Lottery Tickets, and I
think it applies in some measure here,, “My odds of getting a winning
Lottery ticket are about the same whether I buy one or not,”

Great article. However its all hinging on the idea that Majors sign from demo submissions. 1/42 sounds way too optimistic. Huge buzz seems a more likely way to get signed to a major. Which happens through the “indie” route that you discourage. no? If you look at how Majors are really finding acts it seems to me that the indie route is required. I’d definitely put my money on an act that is pounding the pavement rather than one that is sitting at home sending demos out.

1) I was trying to show a quantifiable metric. “Buzz” is not quantifiable and one would have to construct some rather abstract metrics, like number of fans on Facebook, times number of showcase gigs, or something like that. It can be done, but…

2) it is a virtual impossibility for there to be a signed deal without some form of demo submission. The label needs something on file for what they are buying. So even if buzz were a quantifiable metric, you’d still be circling back to demo submissions eventually.

Just a basic response but buy no means an exhaustive one, or even thoroughly correct one.

Then again, most of the majors won’t accept an unsolicited demo. You can send in a million demos and if the major isn’t accepting, then you’ve got to find someone to solicit your stuff. Am I off base? We had a guy who’s sold 200 million records (Denny Randell) solicit our stuff to EMI and that’s how we got in the door. He is, however also the CEO of an indy label (GI Jams), so that’s how we got our “in”. I can’t tell you one band or artist that has sold a million or even 50,000 units by not signing some kind of deal with a major. Can you? Just curious.

The 1 in 42 odds of getting signed sound way too opimistic to me.
I think SteveSinSinatra hit the nail on the head. I think the 43,000 would only represent the small number of solicited demos that actually made it through the door and are evaluated each year. I think the odds of your demo even making it that far are extremely slim.

You make a good point and it’s certainly hard to say because there are so many variables as to what determines if the demo passes through the first and second layer of vetting However, in this article we are dealing only with the “Vegas odds.” In other words, the raw math.

I think the perspective is extremely awesome and does share with your readers [including me =3]
well how any industry in gen. [Gambling or music video games or food] is made up from the components of its parts.

In other words–sure I could go pick my own bananas in Rio and harvest chicken eggs in Florida and get [and clean!]
water from a stream–but it makes more sense to go to the supermarket and buy breakfast — and time.

To me, and speaking only for me–that’s essentially what any industry purchases.
Time: The most valuable of resources.

Of course, with DAWs versus the way record companies still currently do things
[that is $0.00 to make an album versus $350,000 at an A-List Studio with cappuccino, foot massagers, Manager, Producer(s), Lawyer(s) and studio staff + doggie biscuits ^_^]

The “Grey-area” of “Build A Buzz” and go from there I think makes the most sense to artists seeking a career in music for the purpose of financial compensation. =3
My personal theory is that if artists truly love what they do–then through finance, self-satisfaction, and public awareness–the song will satisfy the soul if not in one–all ways. =3

The “Music Industry” is indeed just that–an industry which sells music. [just like pampers sells Diapers. ^_^]
It should not be forgotten [I think at least] that in all actuality… all forms of art are essentially priceless.

What people pay for is to see a performer perform. [in person on tv or otherwise]
Music in my humble opinion will remain a “Business Card.”

I don’t pay people $10.00 for a business card. If I like what they do, I ask for a card.
If I like the person then I will work with that person or become a client for a given service.
I respect you for example, and for that reason I signed up for your workshop and before that purchased your book–
and later requested a consultation.
Artists should learn to think in this way I think.

Had you charged me $25.00 to be on your mailing list–I would not have ever signed up.
A song is for an artist, performer or band– is a form of communication.

Majors can help with that communication process but essentially all music starts “priceless”
and “receives a price” when a “brand” [haha “band” =)] becomes in-demand in “The Music Industry.” =3

Forever In Love With All That Which Exists
(That Which Is Seen & Unseen, Known & Unknown),
-DJ, Writer, Artist, Musician, Eternal Student & Being of Existence,

Great article. And I liked that you save the formulas for the end so I could drink enough tea for the buzz to take it on.

From what I experienced in the big label era of the 80s this is as you have been in your Confessions book so right on.

When one of the majors had us in one of those nice NY studios with a hot shot producer and were ‘getting us in shape’ for our A&R guys big plans I started paying attention (a rare thing for a band guy) to what was going on.

The point you make about ‘getting released’ is a HUGE hurdle to get over, because every A&R guy wants the brass ring for his find, and you have to compete with them just to get past your own label odds.

Okay, I could write a book here… but I will just continue to read yours… thanks for another good one.